Down Payment Assistance Programs You Probably Don't Know About

Updated April 2026

Do You Really Need 20% Down to Buy a Home?

No. The number one reason people tell me they can't buy a home is the down payment. They think they need 20% down, or they've heard that even 3.5% on a California home is $25,000+ and they just don't have it.

Here's what most people don't know: there are dozens of programs across the country that will help cover your down payment. Some of them are outright grants - money you never have to pay back. Others are loans that get forgiven after a few years. And many of them are available to people who don't think they'd qualify.

I'm licensed in 15 states, and almost every one of them has at least one DPA program I can pair with the right mortgage. If you're a first-time homebuyer, this is especially important to understand before you assume homeownership is out of reach. Let me walk you through the major programs and how they work.

What Types of Down Payment Assistance Are Available?

Before diving into specific programs, it helps to understand the four main types of DPA:

Major DPA Programs

CalHFA (California Housing Finance Agency)

If you're buying in California, CalHFA is one of the first programs I look at. CalHFA offers several programs including:

• MyHome Assistance Program: A deferred-payment junior loan up to 3.5% of the purchase price (or appraised value, whichever is less). No monthly payments - it's due when you sell, refinance, or pay off the first mortgage.
• CalHFA Zero Interest Program (ZIP): Covers closing costs with a zero-interest, deferred-payment loan.
• CalHFA Forgivable Equity Builder: Up to 10% of the purchase price as a forgivable loan. If you stay in the home for 5 years, 100% is forgiven.

CalHFA programs pair with CalHFA's own first mortgage products (FHA, conventional, and VA) and have income limits based on county. In many California counties, the income limits are surprisingly generous - often above $200,000 for a household.

Chenoa Fund

The Chenoa Fund is a nationwide DPA program that works with FHA loans. It covers the 3.5% FHA down payment through either a repayable second loan or a forgivable second (forgiven after 36 on-time payments). The key advantage: Chenoa doesn't have the same income or geographic restrictions as many state programs.

HomeReady (Fannie Mae) and HomePossible (Freddie Mac)

These aren't DPA programs themselves, but they're conventional loan products designed to work hand-in-hand with DPA. Both allow as little as 3% down, have reduced mortgage insurance, and accept DPA for the entire down payment.

What makes these powerful:

• 3% down with reduced PMI compared to standard conventional loans
• Boarder and rental income can be counted - if you have a roommate or an ADU, that income can help you qualify
• Flexible sources for the 3% down - it can come entirely from DPA, gift funds, or employer assistance
• Income limits apply but are area-based and can be quite generous in higher-cost markets

GSFA (Golden State Finance Authority)

GSFA offers DPA programs in California and several other states. Their Platinum program provides up to 5.5% of the loan amount as a gift - not a loan, a genuine grant that never needs to be repaid. GSFA programs work with FHA, VA, USDA, and conventional loans.

State and Local Bond Programs

Nearly every state has a housing finance authority that offers bond-funded DPA programs. These use tax-exempt bond financing to offer below-market-rate first mortgages paired with DPA. Examples include:

• Arizona: Arizona IDA (Industrial Development Authority) offers up to 5% DPA
• Colorado: CHFA provides DPA grants and second mortgages
• Florida: Florida Housing offers multiple programs with up to $10,000 in assistance
• Texas: TSAHC (Texas State Affordable Housing Corporation) offers grants up to 5% of the loan
• Washington: WSHFC provides DPA up to 4% with options for forgivable loans

Since I'm licensed in 15 states, I can access the specific programs available in your state and match you with the right combination.

Employer-Assisted Housing Programs

Many large employers - hospitals, school districts, government agencies, tech companies - offer housing assistance to employees. These can range from grants to forgivable loans to matched savings programs. If your employer offers this benefit, it can often be combined with other DPA programs for even more coverage.

How Do You Find DPA Programs in Your State?

There are more DPA programs available than most people realize, and new ones are created every year. Here's how to find the ones that apply to your situation:

1. Check your state's housing finance authority website. Every state has one. These agencies administer the largest DPA programs and maintain up-to-date eligibility requirements. Search "[your state] housing finance authority" and look for their first-time buyer or DPA section.

2. Look at city and county programs. Many cities and counties have their own DPA programs on top of state-level offerings. Large metro areas like Los Angeles, Phoenix, Denver, and Houston often have dedicated municipal programs with their own funding pools.

3. Ask your employer's HR department. Employer-assisted housing programs are more common than you'd expect, especially at hospitals, universities, school districts, and tech companies. Some employers partner with specific lenders to offer down payment grants or forgivable loans to employees.

4. Work with a broker who tracks DPA programs. This is the most efficient approach. I track DPA programs across all 15 states where I'm licensed. When we sit down together, I can run your profile against every available program and tell you exactly which ones you qualify for - and how to combine them for maximum benefit.

DPA + FHA vs. DPA + Conventional

A common question I get is whether to pair DPA with an FHA loan or a conventional loan. Here's a quick comparison to help you think through it:

DPA + FHA: FHA requires 3.5% down, and many DPA programs (like Chenoa Fund) are designed specifically for FHA. The advantage: lower credit score requirements (580 minimum) and more flexible qualifying guidelines. The trade-off: FHA has mortgage insurance for the life of the loan (unless you put 10%+ down), and FHA loan limits may be lower than conventional in some areas.

DPA + Conventional (HomeReady/HomePossible): These programs require only 3% down, and DPA can cover the entire amount. The advantage: mortgage insurance can be removed once you reach 20% equity, and there are no upfront mortgage insurance premiums. The trade-off: you'll typically need a 620+ credit score, and income limits apply based on the census tract.

For a detailed side-by-side of FHA and conventional loan features, check out my FHA vs. Conventional guide. The right choice depends on your credit score, income, and how long you plan to stay in the home. I run both scenarios for every buyer so we can compare the total cost over time.

Common DPA Myths

Just like credit score myths, there's a lot of bad information floating around about DPA. Let me clear up the most common ones:

"DPA is only for low-income buyers." Not true. Income limits for DPA programs are area-based, and in high-cost markets they can be surprisingly high. In many California counties, households earning over $200,000 can qualify. Don't assume you make too much until you've checked the actual limits.

"There's a catch - you'll pay it back somehow." Grants are genuinely free money. Forgivable loans disappear after the forgiveness period. Yes, some programs are repayable loans, but those come with 0% or very low interest rates. Every program is transparent about its terms - there's no hidden gotcha.

"DPA programs mean higher interest rates." Some programs do come with a slightly higher rate on the first mortgage. Others have zero rate impact. The key is running the total cost comparison. Even with a slightly higher rate, the savings from DPA covering your down payment often far outweigh the cost difference. I always show clients both options side by side.

"The application process is too complicated." DPA programs do add some paperwork and may extend your closing timeline by a few days. But the process is well-established, and an experienced loan officer handles most of the coordination. The result - potentially saving tens of thousands of dollars - is worth a little extra time.

"You have to be a first-time buyer." Many programs do target first-time buyers, but the definition is usually "someone who hasn't owned a home in the past 3 years." If you sold your previous home more than 3 years ago, you qualify as a first-time buyer again. And some programs - like certain Chenoa Fund options - have no first-time buyer requirement at all.

Who Qualifies for Down Payment Assistance?

The qualification requirements are more accessible than most people assume:

Income limits are area-based. In high-cost areas like Southern California, income limits can exceed $200,000 for a household. In lower-cost areas, limits are lower but still cover moderate-income earners. Many people earning solid middle-class incomes qualify.

"First-time buyer" is broadly defined. Most programs define a first-time buyer as someone who hasn't owned a home in the past 3 years. If you owned a home 4 years ago and sold it, you're a first-time buyer again. Some programs (like certain Chenoa Fund options) don't even require first-time buyer status.

Credit requirements are reasonable. Most DPA programs require a 620-660 minimum credit score. That's achievable for many buyers who might otherwise think they don't qualify.

Homebuyer education may be required. Many programs require completion of a HUD-approved homebuyer education course. These are available online, often take a few hours, and are free or very low cost. It's a small step for potentially thousands of dollars in assistance.

Can You Combine Multiple DPA Programs?

Yes, and here's where it gets interesting: you can often combine multiple sources of assistance. A typical stack might look like:

1. First mortgage: FHA loan at 3.5% down, or conventional at 3% down
2. Down payment: Covered by a DPA grant or forgivable second loan
3. Closing costs: Covered by seller concessions (up to 6% on FHA) or an additional DPA program
4. Result: You buy a home with minimal cash out of pocket

I've helped buyers close with less than $1,000 out of pocket by strategically layering the right programs together. It's not magic - it's knowing which programs exist and how they can be combined.

What Are the Catches with Down Payment Assistance?

• Occupancy requirements: DPA programs require you to live in the home as your primary residence. These aren't for investment properties.
• Recapture tax: Some programs have a recapture provision if you sell within the first few years at a profit. The amount is usually small, but it's worth understanding upfront.
• Rate impact: Some DPA programs come with slightly higher first mortgage rates to offset the assistance. Others don't affect your rate at all. I always show you the total cost comparison so you can make an informed decision.
• Processing time: DPA programs can add a few days to your closing timeline. Planning for a 30-35 day close instead of 21-25 days is smart.

The Bottom Line

If the down payment is the only thing standing between you and homeownership, you owe it to yourself to explore DPA programs before giving up. There's a real chance that money is available to help you - you just need someone who knows which programs fit your situation and how to access them.

Have questions about what you qualify for? Contact Randy or schedule a call. I'll review the programs available in your state and show you exactly how much assistance you can get. You can also explore your loan program options to see which mortgage pairs well with DPA.